SINGAPORE plans to gradually scale back its stimulus measures, Mr Ravi Menon, Permanent Secretary of the Ministry of Trade and Industry (MTI), told reporters yesterday.

His statement followed the announcement that the Singapore economy grew an impressive 14.2 per cent in the July- September period on a quarter- on-quarter annualised basis.

The Government, which extended a wage-subsidy programme for employers that was set to expire this year to avoid an increase in job losses, is not likely to continue the Jobs Credit scheme when it ends in June, Mr Menon said.

The Government does not expect a return to recessionary conditions even as the outlook for the second half of next year remains uncertain, he said.

The recent rebound "reflected aggressive restocking behavior following the initial fallout of the crisis late last year", he said.

He added: "This is not expected to continue. With inventories now back at more sustainable levels, we expect production to adjust to prevailing market conditions."

The Monetary Authority of Singapore (MAS) joined other policymakers around Asia in saying it was watching property prices and lifted its inflation forecast for next year to between 2.5 and 3.5 per cent yesterday, as a flood of foreign investment raises asset-bubble worries.

"We expect the Government to revise upward next year's growth projections significantly over time and, although not a high-conviction call at this stage, the MAS will probably return to a policy of modest and gradual currency appreciation in April," said Mr Robert Prior-Wandersforde, senior Asian economist at HSBC.

Singapore said that the upward revision in its inflation forecast was due to a pending increase in property tax, rather than any broader increase in underlying inflation.

The previous forecast was for prices to rise 1 to 2 per cent next year.

"There has not been any significant change in our assessment of underlying cost and price pressures in the economy from the time of the monetarypolicy statement release last month," MAS deputy managing director Ong Chong Tee said at a briefing.

However, Ms Selena Ling, head of treasury research at Oversea-Chinese Banking Corp, said that inflation was emerging as a potential challenge for a number of Asian economies. "People tend to look in the rear-view mirror and see Lehman, deflation, etc, but if you look forward, the risks are more on the upside in many Asian countries."

Private-sector economists said Singapore sprang out of recession faster than many had predicted but cautioned that the road ahead remained bumpy. "Logically, if it's been accelerating so fast for two quarters, don't be surprised to see a deceleration in the fourth quarter," said Mr Alvin Liew, an economist with Standard Chartered Bank.

The ministry said that the recovery in developed economies from the global recession remains "fragile" and that its durability is uncertain.

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